Buy-side searches: building a target list that actually closes deals

A PE buyer says they want to deploy ₹500 crore into the specialty chemicals sector. A strategic acquirer wants two bolt-on acquisitions in B2B distribution. A family office wants to acquire a mid-market consumer brand.

Each engagement starts the same way: build a target list. And each engagement, the temptation is to build a long list. Two hundred names looks thorough. The buyer feels covered. The banker looks busy.

Two hundred names produces nothing.

Worth understanding why, and what the working list actually looks like.

The funnel math

Indian buy-side searches run through a predictable funnel:

200 targets sourced. From databases, industry lists, syndicate intros, cold research.

60 fit screen. Pass three-factor filter: sector fit, size fit, growth/profitability fit.

25 management qualified. Verified that management is reachable, plausibly open to a conversation, and meets quality bar.

12 NDAs signed. Conversations went well enough that target signed mutual NDA and engaged seriously.

6 LOI conversations. Active discussions on price and structure.

2-3 IOIs received. Indicative non-binding offers exchanged.

1 close. Single transaction completed.

200 to 1. The funnel is real and the conversion rates are stubborn. Cold outreach response rates run 5-8%; actual meeting rates run 1-2%; warm-intro conversion is meaningfully higher but the warm-intro pool is small.

What this means: a buyer who wants to do one deal in 12 months needs to seriously engage with 25 management teams. A buyer who wants to do three deals needs 75 management engagements. The math doesn't compress.

Sourcing — where the 200 come from

Five sourcing channels, in rough order of yield:

Industry databases. VCCircle, Tracxn, ProwessIQ (CMIE), Crunchbase, Pitchbook, Mergermarket. Each has strengths. VCCircle and Tracxn are best for VC/PE-backed Indian companies. ProwessIQ covers manufacturing and conventional businesses. Crunchbase is global with thin India coverage. Pitchbook is expensive but deep on financial sponsors. Mergermarket is good for transaction history and signal.

Yield: 60-80% of long-list names come from databases. Quality is mixed — much of database data is dated, incomplete, or biased toward companies with PR activity.

Banker rolodex. Investment banks keep informal lists of companies they've spoken to (or pitched) but haven't transacted with. Some are not for sale; some are months away from sellable. The banker's filter on quality is usually accurate.

Yield: 10-15% of long-list names from this channel. Quality is high because the banker has personal knowledge.

Syndicate intros. Other PE firms, family offices, strategic acquirers who have looked at the sector and have a view on who's good. Trade with people who do similar searches in adjacent sectors.

Yield: 5-10% of long-list names. Quality varies. Some intros are genuine; some are 'pass the parcel' for deals that didn't work elsewhere.

Industry conferences and trade bodies. Speakers, panellists, member directories. Lower-yield channel but useful for spotting management teams who present well and have a public voice.

Cold research. LinkedIn, ROC filings, GST filings, press archives. Time-intensive but produces names that aren't in databases — typically smaller or stealth-mode companies. Necessary for sectors where databases are thin.

Filtering — three-factor screen

From 200 names to 60 fit-screened candidates, three filters typically run:

Sector fit. Does the target operate in the buyer's defined sector or adjacent? For PE searches, sector fit is usually narrow (specialty chemicals, not chemicals generally). For strategic searches, sector fit is functional (does this company sell what we sell, or sell to who we sell to).

Size band. EBITDA range or revenue range that fits the buyer's check size. A ₹300-500 crore PE check typically targets companies with ₹40-120 crore EBITDA. A strategic doing a bolt-on for ₹50-100 crore typically targets ₹6-20 crore EBITDA. Outside the band, the deal doesn't pencil for the buyer.

Geography. Where the target operates and where the buyer can support. Most Indian buyers are open to pan-India targets. Some have specific geographies (state-focused PE funds, regional strategic acquirers). Cross-border buyers may have specific India entry constraints.

Fourth and softer filter: growth and profitability. The buyer's underwriting case usually requires specific growth (20%+ for PE growth-equity, 8-12% for control) and specific profitability (15%+ EBITDA margin for most PE, sometimes lower for roll-ups). Targets meaningfully outside these bands get filtered out unless there's a specific value-creation thesis.

After these filters, 60-70 names typically survive from a 200-name long list.

Qualifying — from 60 to 25

Filtering by data is the easy part. Qualifying — confirming the target is reachable and plausibly receptive — is where the work happens.

Steps in qualifying:

Reachability check. Who at the target needs to be reached. Founder, CEO, CFO, Chairman. Their contact information, schedule access, and disposition to take a cold conversation. LinkedIn gives names; warm-intro paths give access; cold email is the last resort.

Openness check. Has the target previously transacted, considered transactions, taken external capital? A target that has never raised external capital and has a 100% promoter shareholding may be open to conversation but unlikely to close. A target that has taken Series B and has a 5-year-old PE investor on the board is much more likely to sell.

Quality check. Brief desk review — financial filings if available, management team backgrounds, market reputation, customer signals. Targets with regulatory issues, governance flags, or recent legal disputes get deprioritised.

After qualifying, 25 names typically remain as the active outreach list.

Outreach — the conversion problem

Cold outreach response rates in Indian buy-side searches:

Email-only cold outreach to a founder/CEO: 5-8% response rate. Most go to spam or are deleted. The ones that get read trigger a generic 'not at this time' response unless the email is unusually compelling.

Cold outreach with personalisation: 8-12% response rate. Personalisation that mentions specific business achievements, recent press, or shared connections doubles the response rate over generic outreach.

Warm intro through banker: 30-50% response rate. The intro carries trust; the target takes the meeting as a courtesy if nothing else.

Warm intro through PE board member or investor: 50-70% response rate. Highest-quality intro because the intermediary has direct credibility with the target.

Actual meeting conversion (after response): 30-50%. Not every responding target wants to meet. Some are responding to decline politely.

Combined funnel: 25 active targets, 15-20 responses, 8-12 meetings, 4-6 second meetings, 2-3 NDAs, 1-2 LOIs, 0-1 closes.

Cycle time

Indian buy-side searches typically run 6-9 months from kickoff to close:

Months 1-2: Sourcing and filtering. 200 to 60 to 25.

Months 2-3: Outreach. First conversations with 15-20 targets.

Months 3-5: Active engagement with 6-10 targets. NDAs signed. Initial diligence.

Months 4-6: LOI conversations with 3-5 targets.

Months 6-9: Confirmatory diligence and SPA with 1-2 targets. Close.

Searches that try to compress to 4-5 months end up with rushed diligence, weaker bids, or worse fit. Searches that drift to 12+ months usually have a sourcing or qualifying problem that should be diagnosed and fixed.

The buyer's role

Buyers underestimate how much work they need to do themselves. The banker can build the list, run outreach, manage process, and negotiate — but the buyer's senior people need to be in target meetings. Founders selling their business respond to acquirer principals, not to bankers.

Patterns we see:

Buyer sends junior people to first meetings. Target's CEO meets a buyer's VP. Target feels under-priced as a relationship. Conversion drops 30-40%.

Buyer's senior people are constantly travelling. Target's window is two specific weeks. Buyer's principal can't make it. Meeting rescheduled. Energy lost. Target's process moves on.

Buyer's investment committee is slow. Target needs a bid in 30 days. Buyer's IC takes 60 days to convene. Target picks a faster bidder.

Fix: buy-side engagement starts with a commitment from the buyer's principals on time investment and decision-making speed. If the buyer can't commit, the search is wasted.

What we run for a buy-side client

Three-stage engagement:

Stage 1 (Month 1): Investment thesis sharpening. What does the buyer actually want — sector, sub-sector, geography, size, growth profile, control vs minority. Tightening this saves 60 names off the long list.

Stage 2 (Months 1-3): Sourcing, filtering, qualifying. 200 to 60 to 25. Outreach planning.

Stage 3 (Months 2-9): Outreach, engagement, negotiation, close. Banker as principal channel; buyer's seniors in target meetings.

Fees structure: retainer plus success fee. Retainer covers Stage 1 and Stage 2 fixed costs. Success fee on closing. Typical structure: ₹30-50 lakh retainer over 6 months, 1.0-1.5% success fee on enterprise value.

A target list of 200 names is a documentation exercise. A target list of 25 names with named outreach paths, quality scoring, and a 9-month engagement timeline is a deal. The bankers who confuse the two are the same ones whose buy-side searches don't produce closes.

What good looks like at month 9

Two to three IOIs received. One in active SPA negotiation. Close pending regulatory in another 60-90 days. Buyer's investment committee comfortable with the diligence findings. Seller's expectations aligned with the bid.

Anything less and the search needs diagnosis — sourcing channel weak, filtering too loose or too tight, outreach conversion below benchmark, buyer's senior team not engaged. Each problem has a fix; the fix needs to happen before another 3 months pass.